What is the Cloud?

At Sifma last week I had a meeting with a major cloud vendor who felt the biggest issue they were dealing with was a lack of understanding of what the cloud actually was. I was surprised by this, but I had seen a similar problems with the open source project Hadoop when it became a popular term, but few people actually understood what it was.

Yesterday I ran across a thread on Linkedin that asked how would a person describe the cloud to their co-workers. The answers where interesting and diverse. I will share a few here:

"Cloud = Commoditization of IT" 

" cloud, in essence is a Fabric which at its core supports the application stack "

"For the end user, I would use the example of google documents, google calendar, gmail. Most people are familiar with Google and you can demo it as well. All the user need is internet access and a browser and they can basically access their "desktop" from anywhere with any internet connected hardware. "

"It is the internet"

Let not forget the Wikipedia definition of the cloud 

When I think of the cloud I do not really consider those things like Salefoorce.com or Quickbooks.com delivering enterprise applications through a simple Website. I really limit my thinking to the ability to  access remote computer time to run applications. A concept that really started with Amazon's EC2 in 2006.  This was a great idea! Amazon had built massive infrastructure to handle the huge computing volumes of their business. However, they noticed that their business volumes were seasonal and a lot of their computers remained idle for much of the year. EC2 allowed them to rent out that capacity, and create another revenue stream for themselves.  It was a true win/win. It was such a great idea that others vendors like Rackspace, Google and Mircosoft with Azure have entered the business. 

The basic idea is sound and companies can save significant money by outsourcing their peak computer usage rather than maintaining the internal infrastructure to support that need. Because of economies of scale of these large cloud suppliers some companies may save money by outsourcing all of their hardware needs.

However, I do see a problem in recent history and on the horizon. Amazon correctly named their service EC2 ( elastic cloud). It was excess capacity that companies could use. What happens if cloud usage no longer is elastic?  In January 2011 Netflix launched on amazon's EC2. Their volume has grown to 20% of total internet usage at any given time. This load along with the overall increase in usage of EC2 has resulted in problems including service EC2 being interrupted. I believe these sorts of periodic volume constraints will continue and increase in cloud computing. In the long term I believe it will be addressed just like it has in the past with a priority system and many levels of service by the cloud provider, but in the cloud provider's case backed by a pricing model.